Why in News?

• The Multi-State Cooperative Societies (Amendment) Bill 2023, which seeks to amend the Multi-State Co-operative Societies Act 2002, was passed by the Lok Sabha.

What’s in Today’s Article?

• Cooperatives in India
• What are Multi-state Co-operative Societies?
• Shortcomings with respect to the Functioning of Co-operatives
• Key Features of the Multi-State Cooperative Societies (Amendment) Bill 2023
• Significance of the Bill
• Concerns regarding the Provisions of the Bill

Cooperatives in India:

• Co-operatives are voluntary, democratic, and autonomous organisations controlled by their members who actively participate in its policies and decision-making.
• After independence, the first five-year plan (1951-56), emphasised the adoption of co-operatives to cover various aspects of community development.
• According to the Article 43B (DPSP) of the Indian Constitution inserted by the 97th Amendment (2011), states shall endeavour to promote -
  • Voluntary formation,
  • Autonomous functioning,
  • Democratic control and
  • Professional management of cooperative societies.

What are Multi-state Co-operative Societies?

• These are societies that have operations in more than one state. For example, a farmer-producers organisation (FPO) which procures grains from farmers from multiple States.
• The Multi-State Co-operative Societies Act 2002 provides for the formation and functioning of multi-state co-operatives.
• According to the Supreme Court of India, Part IXB - The Co-operative Societies(also inserted by the 97th Amendment),will only be applicable to multi-state co-operative societies, as states have the jurisdiction to legislate over state co-operative societies.

Shortcomings with respect to the Functioning of Co-operatives:

• Inadequacies in governance.
• Politicisation and excessive role of the government.
• Inability to ensure active membership.
• Lack of efforts for capital formation.
• Inability to attract and retain competent professionals.
• There have also been cases where elections to co-operative boards have been postponed indefinitely.

Key Features of the Multi-State Cooperative Societies (Amendment) Bill 2023:

• Election of board members:
  • Under the Act, elections to the board of a multi-state co-operative society are conducted by its existing board.
  • The Bill amends this to specify that the central government will establish the Co-operative Election Authority to conduct such elections.
  • The Authority will consist of a chairperson, vice-chairperson, and up to three members appointed by the central government on the recommendations of a selection committee.
• Amalgamation of co-operative societies:
  • The Act provides for the amalgamation and division of multi-state co-operative societies by passing a resolution at a general meeting with at least two-thirds of the members present and voting.
  • The Bill allows state co-operative societies to merge into an existing multi-state co-operative society, subject to the respective state laws.
• Fund for sick co-operative societies:
  • The Bill establishes the Co-operative Rehabilitation, Reconstruction and Development Fund for revival of sick multi-state co-operative societies.
  • Multi-state co-operative societies that are in profit for the preceding three financial years shall finance the Fund.
• Restriction on redemption of government shareholding:
  • The Act provides that the shares held in a multi-state co-operative society by certain government authorities can be redeemed based on the bye-laws of the society.
  • The Bill amends this to provide that any shares held by the central and state governments cannot be redeemed without their prior approval.
• Redressal of complaints:
  • As per the Bill, the central government will appoint one or more Co-operative Ombudsman with territorial jurisdiction.
  • The Ombudsman shall complete the process of inquiry and adjudication within 3 months from the receipt of the complaint.
  • Appeals against the directions of the Ombudsman may be filed with the Central Registrar (who is appointed by the central government) within a month.

Significance of the Bill:

• It will strengthen cooperatives by making them transparent and introducing a system of regular elections.
• The Bill seeks to align its provisions with those provided under Part IXB of the Constitution and address concerns with the functioning and governance of co-operative societies.

Concerns regarding the Provisions of the Bill:

• Effectively imposes a cost on well-functioning societies: Sick multi-state co-operative societies will be revived by a Fund that will be financed through contributions by profitable multi-state co-operative societies.
• Against the co-operative principles of autonomy and independence: By restricting redemption of its shareholding in multi-state co-operative societies.